Government contractor Lockheed Martin Corp. announced Tuesday (Apr. 23, 2013) that across-the-board budget cuts from sequestration could potentially cut its 2013 sales forecast by $825 million.
The company is the first large contractor to outline the impact of sequestration on its business. In January, Lockheed Martin, like other major contractors, published its 2013 sales guidance with the assumption that sequestration would not occur. A statement published in March said that the company was waiting for further guidance from its “government customers” before making specific business decisions.
Lockheed Martin said in its earning report Tuesday that the primary costs from sequestration-related budget cuts would result from rescheduling and “terminating activity” with its supplier base, severance payments made to employees, cost of closing facilities, and possible impairment costs. The company’s “high level” estimate of sequestration impact also assumes many of the federal reductions will be “achieved through delaying and deferring new program starts,” rather than modifying existing programs with “contractually obligated schedule and delivery requirements.”